US-based oil and gas company Pioneer Natural Resources has signed an agreement to acquire Parsley Energy in a deal valued at about $4.5bn.
The deal comes as part of the latest consolidation among US shale producers affected by the oil price crash as a result of the novel coronavirus pandemic.
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Pioneer Natural Resources president and CEO Scott D Sheffield said: “Parsley’s high-quality portfolio in both the Midland and Delaware Basins, when added to Pioneer’s peer-leading asset base, will transform the investing landscape by creating a company of unique scale and quality that results in tangible and durable value for investors.
“The addition of Parsley’s high-quality assets enhances Pioneer’s investment framework by improving our free cash flow profile and strengthening our ability to return capital to shareholders. We look forward to integrating Parsley into Pioneer and continuing our history of strong execution.”
The all-stock transaction is expected to create the largest ‘Permian Basin-only focused’ shale producer and is expected to drive annual synergies of about $325m.
Pioneer noted that the combined company would pump about 328,000bpd of oil.
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By GlobalDataParsley president and CEO Matt Gallagher said: “With neighboring acreage positions located entirely in the low-cost, high-margin Permian Basin, the industrial logic of this transaction is sound.
“Furthermore, the Pioneer team shares our belief that a clear returns-focused mindset is the best tool to compete for capital within the broader market. Sustainable free cash flow and growing return of capital are now investment prerequisites for the energy sector and this combination strengthens those paths for our shareholders.”
Expected to close in the first quarter of next year, the deal is dependent on receiving approval from regulatory authorities.
It is also subject to receiving shareholder approvals and other customary closing conditions.
In November 2018, Pioneer Natural Resources Company signed an agreement to sell its pressure pumping assets (PPS) to US-based oilfield services company ProPetro in a $400m cash-and-stock deal.
